Dividend Investors’ Obituary Syndrome

About a month ago, Berkshire Hathaway disclosed that it had purchased 26.5 million shares of Kinder Morgan at a price of nearly $400 million, at an average somewhere near $15 per share. In the past month, a combination of rising oil prices and the disclosure of the Berkshire investment has increased the per share market value of the holding to $18.62, for a gain of 24% in the past month.

On January 22nd, I wrote in my article titled “Kinder Morgan Stock at $13” that “[t]here will come a time when the price appreciation and dividends from this low $13 price point will be enormous.” That turned to be one my most e-mailed predictions of the past year, with some readers strongly disagreeing with that analysis and others wanting to know how I could be certain that Kinder Morgan would avoid corporate death through bankruptcy or a corporate half-death through share dilution/necessary capital raising while the price of the stock was cheap.

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